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Inventory

Products, parts and raw materials a company has made or bought but not yet sold. Rising inventory can mean demand is slowing, or that the company is stocking up ahead of strong sales.

Simple example

A chipmaker produces 100 chips in a quarter and sells 80. The 20 unsold chips go into inventory, and the cash spent making them stays tied up until they're sold.

80 sold20 unsold: inventoryCash spent making them stays tied up until they sell.
Made-up numbers, for illustration only.

Related terms

Working capitalCash tied up in stock and unpaid invoices, minus unpaid bills.ImpairmentA write-down when an asset is worth less than its book value.Gross marginThe share of revenue left after the direct cost of the product.